Straight Through Chicago

Last week’s LIMRA/ LOMA Retirement Conference in Chicago provided an interesting overview and update for what is happening in the industry today. Jim McCool from Charles Schwab noted the importance of having carriers move to establish trust with consumers, and the need to de-clutter and simplify products and business models. He highlighted the example of Apple as a company that has taken a potentially complex space and made it elegantly simple with a terrific user experience that inspires trust and confidence.

This was a great build on a presentation I had an opportunity to deliver at the conference on Straight Through Processing.

The reality in the United States is that 10,000 Baby Boomers are now reaching retirement every day, something that will persist for the foreseeable future. The opportunity for carriers to prepare for this is now. Further, with low interest rates and continued cost pressure, finding ways to reduce operational expenses while improving customer experience (for both agents and customers) is critical.

Another reality is that customer experiences are increasing being set by companies like Apple, Facebook, Google and Amazon. They have perfected ways to make complex things simple, easy to use, innovative and “delightful” to customers. With expectations set there, business practices that are dependent on paper and rooted in the 1950′s are increasing arcane and inaccessible to agents and customers alike. The need to drive toward electronic applications and electronic signatures is crucial for carriers across lines of business. It is both a crucial step toward better customer experience now … and a precursor to bring able to deliver on meaningful mobile capabilities.

This was an opportunity to highlight findings from a recent Electronic Signatures Executive Brief we published.

When asked if there was a potential crisis due to aging in the producer community, the executive panelists at the conference’s main session noted that there is. Allianz, Schwab and Wells Fargo all acknowledged the problem and highlighted approaches they are taking to prepare for a new generation of advisors.

In some places, the agent / advisor community is actually aging faster than the general population at large. This also highlights the importance of creating better and more compelling user experiences for both producers and end clients. Moving to simplify business process, allowing for the electronic execution of transactions and “going mobile” are all key to this. Carriers will continue to need to compete for advisor “mind share” which will require experiences that can be concurrently compelling to multiple generations of users. All of this, of course, ties back to the Hot Topics we see for insurers in the near future.

The Apple analogy continues to resonate, particularly if carriers want to truly remain relevant in a highly competitive environment.

While there are certainly complexities inherent to the life insurance, annuity and retirement plans segments of financial services, the future is clear: STP is moving from being innovative to becoming a “cost of doing business”. Hope is not a strategy and indecision is not a winning game plan.

New Brief: Wearable Technology and Insurance

Tom Benton

Over the last two years, fitness tracking bands, smartwatches and Google Glass have fueled the next wave of consumer electronics:  wearable technology. Financial services firms and insurers are already starting to find innovative ways to use wearables. In my new brief, Wearable Technology and Insurance , I outline three key capabilities and some examples of how these enable innovative applications for insurers and financial services firms. 

In some respects, “wearables” are not new – after all, the Dick Tracy comic strip introduced their iconic “wrist radio” just after World War II.  What is new is that smartphone adoption and more efficient smaller batteries are enabling new devices and applications.

I currently have two wearables on my wrist – a fitness tracking band (the Fitbit Flex that I have been wearing since June 2013) and a smartwatch (a Pebble – I was one of the 69,000 or so who backed the project on Kickstarter back in May 2012, but I started wearing it regularly earlier this year).  I am seeing more and more people wearing these devices and with the recent introduction of Android Wear, Google’s extension to the Android operating system for wearable devices, we can expect 2014 to be the “year of the wearable”.

As wearables gain adoption by consumers, innovative insurers will find ways to use them in engaging customers.  Others should consider how wearables will fit into mobile and customer communication strategies.  Wearables are on the way – how can you leverage them for customer interactions?  Read the brief and let me know your ideas.

Crowdsourcing Predictive Models: Who Wins?

Martina Conlon

Analysis of data, creation of predictive models, and the ability to take action based on the outcome of those models have always been at the core of the insurance industry. However, there seems to be a peak in interest in the predictive modeling space right now from our research council and clients. Carriers are realizing how effective these scoring models can be across the insurance lifecycle and want in.

From our research ( we know that predictive models can help marketing departments in lead development, cross selling and campaign targeting. R&D departments can use custom or standard predictive models as part of rate making and distribution can use predictive models to better target prospective agents and geographies. Predictive risk models can improve underwriting consistency, transparency, automate segments of the underwriting process, and ensure that the right underwriter sees the right submissions, all the while driving profitability. Using predictive models for claims triage and expert adjuster assignment can have a big impact on claims severity. Insurers use scoring models to gain insight into which claims are candidate for fraud investigation, subrogation, litigation, and settlement as well as more accurate and automated loss reserving.

Although the opportunities abound with predictive models, obstacles slow down adoption, especially for small and mid-size insurers. Potential high cost combined with uncertain return, priority given to other projects, limited internal data volume, the lack of data scientists, and the lack of business sponsorship are among the biggest challenges. Luckily, the vendor community servicing the space is active and expanding, and they are here to help insurers overcome these obstacles. A variety of insurance specific data warehouses, analytics tools, third party data and predictive models can be purchased. Actuarial and specialized consulting firms offer data scientists with insurance domain experience to provide you with the expertise that you lack in house. These vendors are also communicating their successes to business stakeholders and they are paying attention.

And today – a colleague asked me, “Have you heard of Kaggle?” Kaggle is predictive analytics solution provider for the energy industry, but Kaggle also hosts a marketplace for data science competitions for all industries, data science forums and job posting boards. Allstate has an open competition with them for development of a predictive model to predict which quote/coverages will be purchased when a prospect is presented with several options. Data scientists from across the world are working on this right now, competing for $50,000 in prize money. Allstate conducted a similar competition last year around claims with a much smaller prize where they gained substantial benefits and insights from the submitted models, feedback and concepts. And many other Kaggle competitions have no cash prize, just recognition within the community or a job offer.

So one may think – here’s an option to make predictive modeling more accessible to smaller and mid-size insurers. But to date, crowd sourcing of predictive models has been most successful with companies that have a strong analytics practices already. According to industry press, Allstate’s predictive modeling team felt that the infusion of new ideas and approaches was extremely valuable and enabled them to significantly improve their models. Unfortunately, Kaggle won’t likely be a silver bullet for smaller insurers. Kaggle doesn’t offer solution to many of the obstacles mentioned above. However, it does offer one more way for small companies to gain access to a predictive modeling community and skilled data science resources – which may level the playing field just a little bit.

Goodbye, Old Friend

Rob McIsaac

Well, we are at the end of a mighty 13 year run. Microsoft will be pulling the plug on Windows XP life support early next month. All indications are that this is no April Fool’s joke.

All indications also are that someone would have to be fooling themselves to think that continuing to use it now would be a good idea. I have a solitary machine running the venerable OS. It refuses to run Win-7 and so the end has come. In a few weeks the network interface will be disabled and it will revert to being a glorified, isolated, word processor. The sneaker network lives on via a hacker proof thumb drive.

Of course I’m fortunate. I only have one machine to worry about and no dedicated apps that are tied to antique software stack components. The Windows 8.1 machine I’m now running is great and wasn’t much more expensive than 2 year’s worth of extended support from Redmond. Most insurance carriers don’t have such an easy set of choices.

The migration from Windows NT to XP was slow and painful, carrying with it some notable challenges and costs. The journey wasn’t engineered in the shadow of a financial crisis that has had a long, lingering, hangover; it simply faced normal cost headwinds and technical challenges on non-portable code. The contrast between old and new was also stark, with improvement galore, which generally excited users.

This time around, the improvements are significant but harder to see from the UI. In fact the UI is polarizing, so it alone does not create a big push to bring it into use. Perhaps worse, given the long and successful run of XP, is the sheer number of applications that run on it natively and won’t transition smoothly or cheaply. Reliance on old browser version, old software, old databases and other incompatibilities make it daunting to explain why migration is a good idea. It also makes the transition expensive to execute.

Good luck making all those old Access databases, for example, work in a new environment.

Of course, hand wringing won’t be helpful. Developing and delivering on a migration plan, in concert with key vendors, is really the only possible path forward. A range of solutions are possible, including isolating equipment and virtualizing some “legacy” applications. There won’t be a silver bullet on this, however. Looking at this, and a range of other security related concerns, was highlighted in a recent executive brief (IT Security Issues Update) published by my colleague Tom Benton.

One thing for CIOs and their teams to consider, if they haven’t done it already, is building an educational program around this issue. Making remediation part of a broader effort to improve functionality, reduce risk and reduce support cost over time, can also help win critical organizational and executive support. Mixing in some sugar may make it easier to swallow some strong medicine. This one is worth it since failing to address it now could lead to a much bigger problem in the not so distant future.

Unintended Consequences

Rob McIsaac

An article in this week’s Business Week magazine reminded me of the impact that unintended consequences can have on projects and programs throughout financial services. Regardless of how one views the Affordable Care Act, one of the clear points of debate and discussion has related to the speed and breadth of program adoption. Following the decidedly flawed rollout of the Federal exchanges late last year, it seemed that the pace of “uptake” would have been considerably slower than program sponsors had anticipated.

A reality now, however, is that adoption is running along at a pretty good clip. One of the drivers helping this along now are professional tax preparation companies like Jackson-Hewitt and H&R Block (

How can that be?

Well, it turns out that most of the info required to apply for health insurance is included in the tax return preparation process. Once the IRS forms are completed, it only takes about 6 minutes to apply for insurance, which these companies offer as a service to their customers. It isn’t a political judgment on their end, just actions driven by the economics associated with providing good service to their customers. As they are quick to point out, it is also part of the tax code, and their job is to get the best returns possible for their clients.

Didn’t see that one coming!

Which begs the question how many other good things, that may be unintended consequences, do we miss in managing technology for insurance carriers? Once when deploying customer service capabilities for life and annuity clients at a major carrier, we also deployed the portal into call centers to allow CSR’s to see the same screens that customers could. Nice idea. The unintended consequence, however, was that we dramatically improved our Business Continuity capabilities.

How? We achieved this by taking a variety of systems on different platforms and with different user experiences, and browser enabling them. It was a remarkable, if accidental, addition to our technology capabilities, which created real and measurable long term value.

Are there other unintended consequences that can appear as technology projects unfold? Absolutely there are. One of the challenges that CIO’s and their teams need to keep in mind is how they can foster the appropriate level of situational awareness, and openness of mind, to recognize these opportunities when they emerge.

This isn’t to say that all unintended consequences are “good things”, of course. There are many instances where the result of changes turns into poorly performing systems or capabilities that fall far short of the original objectives framed during the design phase of an initiative.

The key point remains, however. Not all surprises have to be portents of bad news. As new technologies emerge and business processes evolve, there may be new opportunities to see multiplied value for carriers making the appropriate investments in new and innovative ideas. This is potentially an area for IT organizations to add significant, strategic, value.

Uber and Insurance

Matthew Josefowicz

There was an interesting article by Brad Stone in BusinessWeek a little while back about how Uber is disrupting the taxi business by creating a customer-focused application.

Here’s the money quote:

Dispatchers at the major cab companies didn’t seem to care about prompt customer service since they make money primarily by leasing their cars to drivers [emphasis added]. David Autor, an economics professor at the Massachusetts Institute of Technology, says the industry is ‘characterized by high prices, low service, and no accountability. It was ripe for entry [by startups] because everybody hates it.’

Next time you call your local cab company, remember, you are not really a customer. The driver is the customer. So the cab company has only minimal incentive to provide any kind of customer service.

For some reason, this reminded me of all those insurers who say the agent is their customer. At least for cab companies, it’s true. The driver pays them. But many insurers still believe the person or business who writes the check is not the real customer.

When those customers have an option to deal with a company that treats them like the real customer, watch out.

Mobile Matters

Rob McIsaac

It was fifty years ago that the Beatles arrived in America and changed the world. When it was happening, you knew it was somehow big, but even the most prophetic among us could not have imagined just how important it was. As a wee lad, I remember watching the Ed Sullivan show with my grandparents that night, somewhat transfixed. It was a different world on Monday.

Some years later, when Team Apple rolled out the iPhone and iPad, I recall thinking that this was interesting … but didn’t seem to solve a problem I had. My PC, laptop, TV, Blackberry, camera and stereo were all state of the art. Why would I need a new thing? Visions of another Newton danced in my head.

Boy, was I wrong.

While I still have all that other stuff, it is used far less often than it once was. And I now plug the iPhone into the stereo and control the TV from my iPad. I plug the iPhone into my PC in order to suck off the pictures.

Regardless of whose device is used now, mobile devices matter. A lot.

In fact, they have changed the world. I knew it had reached a tipping point when my wife, also a Baby Boomer, albeit one who doesn’t fancy technology, was peering over my shoulder while I was checking for flights on a laptop. In a gentle arc, her index finger gracefully touched the screen and gave it a gentle swoosh. Nothing happened.

Well, something happened. I doubled up in laughter … and realized that it is “game over”. The device is headed the way of my grandparent’s 78 rpm records and the rotary phone. They still work, but who cares?

Last week, my Greatest Generation mother announced that she was tired of going to the computer room to use the PC. What tablet should she get? Confirmation: put a fork in it.

And then I thought about other things in the last year. When I rent a car now, I get checked out on a tablet. When I went to a restaurant in China, the menu was on a tablet. When I took a helicopter ride at a local air show, the GPS hanging in front of me was on a Smartphone. When I had a chance to fly on a WWII bomber to commemorate the Doolittle Raiders, I checked in on an app … and the crew chief’s pre-flight checklist was running on a tablet as he prepared a plane built in 1942. And of course I can now pay bills, trade stocks, get my flight boarding pass and ride on Amtrak based on things I do or keep on a mobile device.

And my favorite recent experience: we recently went to see a Symphony performance. After warming up and while waiting for the conductor to arrive, a lead violinist pulled out his Smartphone and deftly flicked through some work. I wondered if he was updating his Facebook profile.

Which then gets me back to insurance which feels a bit like stepping through a time warp. I recently needed to replace a 10 year term life policy which had naturally and happily run its course. I was stunned to find just how arcane, antiquated, wasteful and expensive the whole process was. In fact, I’m pretty sure I saw no technology in use that hadn’t been invented before 1980. Heck, back then I was still buying Beatles albums. On vinyl.

I was truly astonished at the lack of progress that has been made (probably since John, Paul, George and Ringo landed) in this area. For insurers this should be a wakeup call. I’ve probably bought my last Beatles album (this Internet thing looks like it might work out …) and I’ve probably bought my last life insurance policy. When I describe the Beatles landing my kids can’t quite figure out what to make of all the screaming … but they are consumed by spasms of laughter when I describe current life carrier processes and (lack of) consumer technology.

For carriers, the time to start thinking about mobile capabilities is now. Mobile matters. And cassette decks, VCRs, reel to reel tape and the Beatles aren’t coming back. Save nostalgia for another day.

Oh, and the Beatles record label was … Apple. Imagine that.

Gamification in Insurance

Karlyn Carnahan

Great article titled “Getting into the Game” by Lori Chordas in the February edition of Best’s Review about Gamification in insurance (pages 37-38 in print edition). In the article, I shared some key thoughts from our upcoming executive brief on Gamification. Carriers are employing more creative and engaging gamification tools in all aspects of the insurance value chain. Carriers started using games as branding, moved into training and education, and we’re now seeing game techniques used in the quoting process to drive customer acquisition.

The key to a carrier’s success with gamification is to clearly identify the goals and strategy of their initiative and design the game with that in mind. A game should not only be fun, but should also deliver results.

Consider how to build basic gaming techniques into other aspects of the business processes. Often mundane tasks can be made more engaging by adding fun tools to the process. Using basic game techniques – rewards, surprise, and social aspects to name a few reward users for their efforts, and users will in turn share these tools with others. A fun, viral game that is aligned with strategic goals can drive results. Not all carriers have gaming experts on staff, but there are a number of universities and colleges that have gaming programs. You may want to work with them to get help and provide students with opportunities for real world practice.

Update: Here’s the video interview from AM Best…

A Tale of Two Experiences

Rob McIsaac

As a consumer of things, and a student of technology, I’m increasingly aware of the things companies do in order to satisfy the increasing expectations of demanding customers. In reality, time starved and busy people are unlikely to be charmed by the opportunity to listen to endless loops of bad Muzak or periodic injections from an automated voice reiterating how “important you are” while minutes tick by that can never be recovered.

Financial services firms seem to struggle mightily in this regard. IVR’s require a variety of inputs to theoretically validate identities only to find that the first question a CSR asks is the same as what was previously keyed in. Transacting business on multiple accounts / policies / contracts concurrently can feel a lot like self-inflicted dentistry. Part of why customer can sense that different lines of business are operating as different business may be an artifact of historical organizational structures, internal politics or something else entirely. The actual cause is irrelevant. Amazon and their ilk have dramatically raised the bar and being nominally better than the DMV at customer service won’t lead to a happy place.

Two recent trends are noteworthy.

First, increasing numbers of companies have perfected the art of allowing customers to get into a virtual line to be called back when a CSR becomes free. This is a win for everyone; the customer isn’t stewing over a long and unproductive wait time, CSR workloads can be more effectively managed and the call center infrastructure can be more efficiently utilized. While this may have come from Amazon we now see it being used in places like cable TV providers, not historically known for top shelf customer service.

Another emerging trend is the ability for customers to start a transaction on their own in one channel (i.e., the Internet or via a mobile device) then complete it in another, such as over the phone or in a brick and mortar facility. Customers get the control and shopping experience they want then have the opportunity to seek expert advice when and where they want.

This comes as quite a contrast to the traditional sale of life insurance or DI products where companies seem compelled to follow rigid and inflexible procedures destined to both slow progress and make a customer do things on company terms, rather than the other way around. Having support hours that do not include evening or weekend coverage is pretty frustrating from a customer perspective but not uncommon for Life insurers.

Putting these experiences together in a continuum it can, for a consumer, feel like Dickens was right: it may be the Best of Times and the Worst of Times … all at the same time. It shouldn’t be hard to determine which side of this paradigm the “winners” will be on, however.

For insurance carrier CIO’s finding ways to deliver better service at lower cost may simply be another attribute of our New Normal. Game on for 2014!

Just Because You Can

Rob McIsaac

Even though I’ve spent much of my career in and around technology, I’m still frequently amazed at the things we are able to do now. Intuitive user experiences, expansive tools for creating insights and effortless transactional capabilities are all part of the modern experience.

Which makes it seem all the more startling when technology offerings go so horribly wrong. This also created a sort of “what were they thinking?” reaction to a recent release by a top US-based technology company. With some fanfare, I got the release yesterday on a new (and exciting) video conferencing capability. The marketing was engaging; now I’m curious.

This is a business app of course. When I fire it up on my corporate laptop it dutifully engages Internet Explorer after which … nothing happens. I do eventually get a message saying “sorry, we don’t support your browser yet”. Next to arrive is a message offering to install Chrome for me so I can see their new tool. Which, of course, I can’t since this is a locked down corporate machine. All the marketing messages go in the trash, I shake my head over the wasted time … and note to avoid that vendor in the future. What were they thinking?

Of course, that’s the problem. They weren’t thinking. Just because they have a cool technology doesn’t mean they should blindly launch it on the hope that it makes sense to the recipient. The context in which something will be used is critical to understand if the impact a company has on its customers is remotely close to the desired one.

This is, of course, not something unique to technology vendors. Insurance companies need to think long and hard about this as well. It requires that carriers do something that frequently is incredibly difficult: think from the outside in, rather than the inside out.

The “customer” may be either the producing agent, the premium paying customer, or both. Regardless of who it is, understanding how techno guy and messaging will be received in their contextual experience will be key. Some things may be obvious such as the lack of understanding for internal organizational structures and acronyms. Others might be less so, like an appreciation for the nature of the physical equipment they use. Irrespective of these elements, carriers looking to maximize the returns on their investments should make the effort to understand these things before they launch an effort.

Some years ago, while I worked as the CIO for a bank, we “discovered” that many of our customers were suddenly unable to use their bill payment functionality, a pretty critical component in a banking relationship. We quickly traced the problem to the vendor we used for bill pay. They had decided to use some “cool new tech” to enable an upgrade, and then tested it only on their corporate desktops. It apparently worked just fine on versions of IE that were no longer being sold by Microsoft. They never tested it in Firefox, Safari, or current releases of IE which created an impressively painful rollback experience. It also taught us that we needed to really understand end user environments … and that we needed our vendors to do exactly the same thing. We rewrote contracts to assure ourselves that the appropriate testing was going to be done by vendors, including building in provisions the required support for browsers and versions that achieved market share thresholds. In effect, we need for both our own internal IT teams and strategic vendor partners to view the company from that outsider perspective so that we would know precisely what the customer experience would be. Guessing and estimating are not options when you have so few opportunities to make initial impressions and where a prospect or customer can so easily move from one company to another.

This issue is now exacerbated by mobile capabilities that bring with them different form factors, operating systems and interface nuances. Getting it right there is now so important that some companies have moved to a “mobile first” deployment paradigm that would have been hard to imagine until very recently.

Just because a company can do something doesn’t mean they actually should! Thinking through the experiences, as well as the consequences, should be critical to developing a go to market strategy for technology solutions.